CIT Says Q&V Questionnaire Data Good Enough for Use of Expected Method

The Court of International Trade in a March 11 decision made public April 1 sent back the Commerce Department's departure from the expected method in setting the separate rate companies' rate in the 2016-17 review on the antidumping duty order on multilayered wood flooring from China.

In the review, mandatory respondent Sino-Maple (Jiangsu) Co. failed to report transaction-specific sales value data for initially unreported U.S. sales, leading to an adverse facts available AD rate. Judge Richard Eaton said that while this data was necessary for the calculation of an individual AD rate for Sino-Maple, "it does not appear to have been necessary for Commerce to use for the expected method," which is a weighted average of Sino-Maple's AFA rate and respondent Jiangsu Senmao Bamboo and Wood Industry Co.'s zero percent rate.

Administratively, Commerce assigned Sino-Maple an 85.13% AFA rate and Senmao a zero percent rate, then averaged these two marks for a 42.57% rate for nine separate rate respondents not individually examined. The nine companies contested the use of a simple average, claiming Commerce should have used the expected method of a weighted average.

Eaton agreed. Commerce's claim that it actually used the expected method by using a simple average "is not quite right," the judge wrote, declaring the expected method to be a weighted average of the zero, de minimis and AFA rates provided that volume data is available.

The court also said the departure from the expected method itself cut against the rules for when Commerce may depart from this method. The agency can drop this methodology when using the expected method isn't "feasible" or would lead to an "average that would not be reasonably reflective of potential dumping margins" for the separate rate respondents.

To do this, the agency must show that the volume data for Sino-Maple was incomplete, Eaton said. While Commerce said the volume data for Sino-Maple was "unavailable" because the exporter failed to report some of its U.S. sales, "the record is not entirely devoid of information from which the Department might determine Sino-Maple’s U.S. sales volumes for purposes of calculating a weighted average," the opinion said.

Prior to picking its mandatory respondents, Commerce sent quantity and value questionnaires to the 30 largest producers and exporters by volume. Sino-Maple responded, identifying its total quantity and value of its U.S. sales. Eaton said that Commerce didn't explain why this information, "which the Department found reliable for mandatory respondent selection purposes, was not also reliable for calculating a weighted average under the expected method for determining the rate assigned to the Separate Rate Companies."

However, Eaton noted that the volume data in this response didn't represent all of Sino-Maple's U.S. sales because the company later found some sales subject to AD. In the review, Commerce rejected Sino-Maple's request for more time to submit the sales value information on a per transaction basis, although the "aggregate quantity information for these sales were placed on the record."

The failure to report all the per transaction sales didn't bar Commerce from using aggregate quantity data for Sino-Maple's unreported sales along with import volumes from the quantity and value response, which the judge said seemed to be enough to use the expected method. Eaton drew particular attention to a chart the agency created depicting the total volume of Sino-Maple's reported and unreported U.S. sales during the review period.

Commerce argued that it didn't need to explain why it departed from the expected method but needed only to state a reason without further explanation because its path to the decision was "reasonably discernible." Eaton replied that this "is not the law," adding that Commerce "has not adequately explained its reason for departing from the expected method." The agency didn't explain why it couldn't use the chart it created in using a weight average of Sino-Maple's and Senmao's AD rates, the opinion said.

The separate rate companies additionally argued that the separate AD rate is "aberrational" and not reflective of their potential dumping margins and that the use of AFA violated the U.S. Constitution's excessive fines clause in the Eighth Amendment. Eaton said that since the rate was remanded, these claims will be addressed following the remand proceeding.

Mark Ludwikowski, counsel for importer Lumber Liquidators Services, said in an emailed statement that he believes the ruling is "a step in the right direction and consistent with the statute. It remains to be seen if Commerce abides by the Court’s remand, but if so then the separate rate should be recalculated downwards using a weighted average since the mandatory respondent Senmao (which received a rate of 0%) has typically been the largest exporter."

(Fusong Jinlong Wooden Group Co. v. U.S., Slip Op. 24-29, CIT # 19-00144, dated 03/11/24; Judge: Richard Eaton; Attorneys: Alexandra Salzman of deKieffer & Horgan for plaintiffs led by Fusong Jinlong Wooden Group Co.; Daniel Witkowski of Akin for consolidated plaintiff Sino-Maple; David Craven of Craven Trade Law for consolidated plaintiffs led by Huzhou Chenghang Wood Co.; Adams Lee of Harris Bricken for consolidated plaintiff Zhejiang Dadongwu GreenHome Wood Co.; Lizbeth Levinson of Fox Rothschild for consolidated plaintiff Baishan Huafeng Wooden Product Co.; Kavita Mohan of Grunfeld Desiderio for consolidated plaintiff Scholar Home (Shanghai) New Material Co.; Sarah Wyss of Mowry & Grimson for consolidated plaintiff Yihua Lifestyle Technology Co.; Gregory McCue of Steptoe & Johnson for consolidated plaintiffs Struxtur and Evolutions Flooring; Mark Ludwikowski of Clark Hill for plaintiff-intervenor Lumber Liquidators Services; Sonia Orfield for defendant U.S. government; Stephanie Bell of Wiley Rein for defendant-intervenor American Manufacturers of Multilayered Wood Flooring)